Case Study 3 – Transition from Controller to Acting CFO
THE CHALLENGE | CFO professional development
The Controller/VP of Finance for a 2,500 person healthcare services provider was hired by the CEO 6 months earlier with the expectation that she’d take the mantle of his retiring CFO, who was to have mentored her in the lead-up to the PE acquisition. CFO professional development seemed urgent, yet it didn’t materialize as the old CFO faded from the scene as soon as the deal closed.
The CEO prided himself on spotting young talent and grooming it in exchange for a relative bargain comp package, and had a successful track record of doing so, including with the current COO. “Wendy” started well and was initially dubbed a rock star by the CEO. She’d also impressed the PE partners as a highly capable go-getter during their due diligence process. Yet within 3 months of deal-close it was apparent that Wendy as Acting CFO was struggling to think strategically.
Wendy’s communication style was also not meeting the CEO’s desire to be kept abreast of developments. She believed that all should be satisfied that “If you don’t hear from me, it means we’re on top of it. That should suffice. Trust me.” Being inexperienced as a CFO, she underestimated potential issues and under-communicating sometimes took the CEO or PE partners by surprise.
A managing partner at the PE firm sought coaching for Wendy as a last-best-hope to help her find her strategic footing, become more operations-minded, and able to generate more meaningful analytics and insights for the Board. She needed to elevate Finance team performance to keep ahead of the company’s 30% annual growth. The consensus was that all the parties were willing to invest, provided that there were rapid and measurable signs of improvement within 90 days.
THE APPROACH | CFO professional development
As time was of the essence, the engagement started within a week with a coaching framework designed to identify limiting beliefs, identify behavior styles, motivators, acumen and capabilities (TTI Success Insights’ TriMetrix is a valuable tool in this regard). The data from Wendy’s 360 review provided a startling reality check, revealing a wide gap between her self-perceptions as Acting CFO, and her constituents in every segment. The focused results led to a clear set of action plans to harvest some low-hanging fruit – simple yet powerful processes were put in place. For example, Wendy embraced a more rigorous time-management system, and talking points to drive a higher-performing culture where “it’s not my job” was no longer tolerated on her team.
Wendy also crafted a CFO Dashboard to consistently communicate status of initiatives, which was well received by both her CEO and the team. Wendy began to require every meeting to have a clear agenda in advance, reduced the length of many key meetings, and began to ensure each meeting ended with a clear set of recap notes – who will do what, by when – to drive accountability and rapid action, which were circulated within 24 hours. Each follow-up meeting began with a review of prior recap notes, sending clear messages about rising expectations for follow-through. The team began to rally as they saw momentum building, while others began to exhibit resistance and Wendy started to identify who was not a good fit.
Through CFO professional development Wendy also realized what she thought of as a tight communication style was actually very imprecise. As she began to quickly adapt, her expectations became more direct and she became increasingly impactful in getting stuff done. Wendy also reframed her view of the CEO’s communication needs, initiated some frank dialogue with him, and began to rebuild trust through rapid follow-through. Wendy also came to grips with the need to demote her VP of Revenue Cycle Management, and she created a framework for having difficult conversations she’d been avoiding with several members of her leadership team.
THE OUTCOMES | CFO professional development
Wendy struggled significantly with the coaching frameworks designed to develop strategic skills as a CFO – a common challenge that one PE partner jokingly sums up as “Trying to make someone strategic is like trying to teach an elephant to dance”. She realized how narrow her concept of the CFO role had been. Key coaching exercises led her to exclaim, “I just don’t process this way. Strategic thinking makes my brain hurt. It takes me 10x longer to process strategy vs. accounting.” She began to re-examine what led her to accept the role as a CFO-in-waiting − given that she’d initially applied to simply be the Controller. Then, since she’d back-filled the role of Controller and that person was swiftly making great contributions, Wendy concluded it would be best both for everyone if she gave her resignation, so that a CFO with solid growth and PE experience could be hired to drive future growth.
“I gained a much clearer, broader understanding of what’s required of a CFO at a PE company. I learned more effective ways to hold others accountable, and to have difficult conversations. Coaching also helped me realize this role was not the best fit for me. As much as I love the company, [CEO] Geoff and [the PE partners] deserve someone more naturally strategic to lead changes and handle 30% growth.” – Client / Acting CFO
Epilogue:
The CEO appreciated Wendy’s candor and willingness to do what’s best for the company. He accepted her request for a 6-month severance package and the offer of a smooth transition, realizing this was the most amicable, low-cost resolution to a hiring mistake. Then, before an agreement was put in place, Wendy received another offer at a different firm. While her decision to accept left the company scrambling for an interim CFO, the firm saved six-figures by avoiding any kind of severance payout – representing a nearly 6x return on this 3-month coaching investment.
“CFO coaching brought us both clarity and action. Sponsor updates produced healthy discussions and a way forward. CFO professional development helped Wendy identify big gaps and made some strides in just 3 months. I appreciated that after working with her coach, Wendy came to me with a proposed cost-effective transition plan.” – CEO / Sponsor
(*) Names changed to maintain Client and Sponsor confidentiality. Tailored solutions and services for CFOs, Executives and VPs. See what others say.
